Since April of this year, three companies in Wenzhou Jiangnan Leather, Portman, and Sanqi Group are on the verge of bankruptcy due to their bosses fleeing or poor management, all of which point to the breakage of the capital chain. The closure of small and medium-sized enterprises in Wenzhou and the “hollowing out” of the industry have once again become increasingly vociferous.

Wenzhou people who only sell

Historically, Wenzhou SMEs are a very strong and viable team. Over the past 30 years, Wenzhou has also emerged from the backwaters of rural areas to become an active and developed private economy. However, Wenzhou has not become a brand creator and has reached the upper reaches of the industry chain. Instead, it has stepped toward “hollowing”.

Why is this? The appearance of Kong Weihong, an entrepreneur who does foreign trade in Wenzhou, is essentially an internal cause. The Wenzhou model does not really establish his own industrial chain. “Their focus has been on buying and selling, not on the industry chain. To take into account immediate interests. Wenzhou people's strengths and competitiveness are sales, the market, should learn and study brands, build brands. They have the ability to , but they really don't see this."

Kong Weihong gave reporters an intriguing example. She currently puts the company's headquarters in Suzhou, concentrates on an international brand gateway, helps international brands to make the Chinese market, and is negotiating the introduction of an American brand. The Wenzhou businessman's sense of smell is very sensitive. He has not signed yet, and many people have already found it and vowed to do so. Said: As long as the brand is subcontracted to me, to ensure how much sales a year. “Wenzhou people know the gold content of this brand. This is good. It shows that they have business minds. The problem is that the world’s brands do not dare to hand over this matter to Wenzhou people, because the concept is different, because they do not want to step Pierre Cardin and Goldlion. Waiting for the brand, because you are not branding, you are just selling."

Refunding industry chain

“Wenzhou businessmen are risk-conscious. They can survive. They will not die. Don’t worry about what the Wenzhou companies will be. But his downstream cooperatives are bad,” Kong Weihong said.

Kong Weihong owns and cooperates with 5 factories and faces development difficulties. From last year, she began to cooperate with Chongqing and transferred the entire industry chain. It is not just to move its own factories but to integrate them with downstream factories. “What I want to solve is industry, customers, orders, and partners in my industry chain. This is a mode of industrial transfer.” This is Responsible industry leaders are also wise integrators.

To make the industry bigger, not just a small one, it is inseparable from financial support. The problem is that capital is characterized by its love for the icing on the cake. This is the same in all parts of the world. Even worse in China, it must wait for you to be strong before coming to you. Prior to the order of 50 million yuan, Kong Weihong didn’t have much liquidity on hand. “We did our best to find the right customers and we did make every order profitable.” After 50 million yuan, Kong Weihong discovered that the bank began to look for it and the government began to support it. At this time, the first temptation emerged: Do you continue to focus on rationalizing the supply chain or making more money?

"If it is to make more money, I must go to invest in real estate, buy a piece of land, change hands and certainly make money." Kong Weihong is "very conservative" and spend money to open up the supply chain and upgrade, not only OEM, and began Do ODM. "The difference between this E and D is that, first of all, I have been able to do all your market development between you and I can help you take the initiative to do it. You just have to choose to do it. Secondly, your entire service model , including sales services, etc., we have been able to do the on-site service.” Because of this, in the financial crisis in 2008, Kong Weihong successfully passed. "Not lost." Kong Weihong said. The current risk is even greater than in 2008, because at that time there was still state tax rebate support, and this time there was no policy support, but she could hold back.

This wave, the entire country is in a stage of transformation and upgrading. As long as it is not a brand enterprise or a large enterprise, it is difficult to obtain government support. Banks also support large enterprises and give them the most favorable loan interest. SMEs can hardly make loans. Wenzhou SMEs loan loan sharks and private capital, but the highest monthly interest rate for private capital has reached 3 to 5 percent, which means that if you borrow one year, the interest rate is 50%. Looking at the profits of private enterprises, the business of Wenzhou people is mostly 5% to 10% of small profits. How do they live? As a result, many people use the industry as a financing platform and borrow money to make money later. Their logic is to first go to make money, and later to save money to save the company. The question is: Can investments such as stocks and real estate really produce money?

"A lot of people do real estate, and then refinance the real estate capital here. The problem is that real estate is a place to eat cash, not a place to contribute cash, it will just take away your cash in the factory, in fact, this is called pumping. Blood is not called blood transfusion. They are not aware of this.” Now that the state strictly controls real estate, it is also difficult for Wenzhou people to collapse, and the stock market is not. Those companies that make money from industrial mortgage loans may not be able to borrow, that is, they have no chance to breathe. “To do business really needs to plant a tree, not just to earn a little money.” Kong Weihong puts forward a “back-feeding industry chain” mentality, and he has also practiced it, realizing that the company grew up bigger and stronger. Difficult process.

Kong Weihong had a Venezuelan client. When he started the cooperation, the purchase amount was only US$500,000. She rallied the profits to cultivate this client and market together. After three years, the purchase amount was US$30 million. Kong Weihong said: “After the customer has been with you for so long, he is willing to follow-up with you for further development, and even in turn to invest in us. This is the value of the customer. I don’t think it makes sense for me to make so much money. I can stand In the front-end of the industry chain integration, this is the direction of my efforts, not just making money."

A good integrator must be willing to feed back factories. Kong Weihong’s approach is that other people pay 30 days after the order is shipped. She orders advances and provides technical support. Kong Weihong invested a lot of money as a development center. In general, downstream plants will not invest in development until they see the order. As the upstream integrator, Kong Weihong sent all the designers to participate in the exhibition, communicated with the customers, collected information, analyzed the fashion trends, and returned to the downstream factories to invest in the development of molds. If the downstream factory develops the mold, she also bears the cost.

"I want to be a platform for everyone on this chain to follow me from OEM to ODM." Kong Weihong said, "Secondly, with the platform, you talk to the government and talk with the banks are solid." Regrettably Yes, there are too few "well-meaning" integrators like Kong Weihong. Many factories in Wenzhou, including many large factories that received government subsidies, used money to buy land to buy a house. The factory's business slowly shrank. As a result, the entire downstream factory was in a difficult situation and had to think of other ways to “produce money”. Have to leave the main business and go to a loss.

Better to do real estate?

Some people say that Wenzhou companies are not a bad problem, but the question of where to invest money. According to Zhang Yili, executive vice president of the Wenzhou University Business School, most Wenzhou private enterprises are directly or indirectly related to real estate. “Apparel companies have limited profits. We use it as a platform to accumulate contacts or finances.” Zhu Zengsha, chairman of Wenzhou China Snow Valley Group, told reporters that if the real estate industry is used as an example, if the developer’s real estate investment project is temporarily missing one or two million yuan. Funds, they inject this money, developers pay them a monthly interest of 20% to 30%, 3 months after the collection. Zhu Zengsha said that this type of investment is convenient and effortless, even exceeding the net profit that the apparel industry has brought him. Zhu Zengshao said that as long as it is a legitimate and profitable project, he is involved.

"Now this industry (real estate) is not good, the situation is not clear, is currently in the state of withdrawal (projects that have been voted on before, are now receiving money)." Wenzhou Min Yang Group Chairman Liu Fengyan told reporters. This round of national credit tightening has left many corporate loans without a door, and at the same time, the real estate purchase restriction order has caused Wenzhou bosses to develop real estate or own-owned real estate that is unmarketable and the funds are stuck. A Cangnan shoe company, the past 10 years, the company's boss will be made on the shoe machine manufacturing all the money used to buy a house, north to Heilongjiang, south to Hainan, there are real estate everywhere. The main business, no development for 10 years.

“Now, the manufacturing enterprises in Yueqing, Wenzhou, whose production scale is below 200 million yuan, are basically losing money, because the profits are low, and the sum of no amount is a deficit. They just use the company as a financing platform to engage in some other Investment.” Wang Chu, vice president of Wenzhou Huanyu Group Co., Ltd. introduced. However, a company has not yet opened up the main industry chain, and diverted funds to invest everywhere. Not only can the team fail to keep up, customer service can't keep up, product quality can't keep up, and there is a time when prosperity is not sustainable. A recent research report by Liu Qihong, director of the Regional Economic Research Center of Hohai University, also pointed out that the pursuit of huge profits by Zhejiang capital has, to a certain extent, inhibited its investment in industrial innovation, and the local economic development momentum has shown signs of failure.

Take the development bottleneck of Wenzhou footwear as an example. The entire industry is not the same as Quanzhou. Quanzhou has come to the brand, design and quality, but Wenzhou still stays at price competition. At the lowest downstream, whether you are a trading company or a factory It squeezes profits like a toothpaste on the price. Some shoe profits only 2 cents, in order to survive, shoe factories continue to go down, such as Wenling area, do injection shoes, PU into PPC, has reached a critical point, "PPC shoes can be thrown in 3 days to wear Lost, an odor." In this way, customers go down. Americans do not wear such shoes. Europeans do not wear such shoes. They can only go to African customers, but if they continue to go on in Africa, they will be able to Will lose it.

“Some industries in Wenzhou have indeed come to a dangerous situation. This is caused by profit orientation. If we are industry-oriented, we absolutely cannot do this, and I would rather not do PPC shoes.” Kong Weihong said. In fact, in recent years, a considerable number of Wenzhou SMEs have disappeared unconsciously. At the peak of development, Wenzhou had more than 6,000 shoe factories and the current number has dropped to more than 2,000. Some local shoemakers in Wenzhou have chosen to go out and build factories. Aokang, Kangnai, Belle, Dongyi and other powerful shoe companies have already built industrial parks and production bases in Sichuan, Chongqing, Hebei and even foreign countries. Either the transformation, taking the high-end route, or transfer, the factory moved to lower-cost areas.

“We also want to transform and upgrade, sell the product price higher, but have no experience in the new market, there is no understanding of the talent, and even there is not enough money to invest in, how could it be said to turn?” This is a Wenzhou luggage The confusion of manufacturing traders revealed the collective dilemma of Wenzhou SMEs. Kong Weihong is considered an “surpassing person”. Her experience is to focus on the main business, to feed back the industry chain, to go upstream, to learn from the European and American people as a brand, and to be a market. From 2008, the company has grown step by step. "After achieving 50 million or more, I do not care about writing business to make money, but care about the development of the industry chain, and ultimately benefit myself and allow myself to survive." Kong Weihong's focus and experience are worthy of consideration by Wenzhou businessmen.